Month: August 2003

“EEOC Asks Boies Schiller to Codify Tracks, Pay“: Anthony Lin for the New York Law Journal via Law.com reports:

Last week, the EEOC determined that the law firm co-founded by prominent litigator David Boies had discriminated against female associates, relegating them to a lower-paid, non-partnership track. In a letter sent to the Armonk, N.Y.-based firm’s outside counsel, Ronald Green of Epstein Becker & Green, and obtained by the New York Law Journal, the EEOC proposed 13 steps it believes Boies Schiller would need to take to remedy the Title VII violation.

You can read the article to find out what the EEOC proposed in the matter. Some of the steps required by the EEOC were for the law firm to delineate the qualifications necessary for hire onto the partnership track, the performance requirements to be met for promotion onto the partnership track after hire, and the pay structure for the two different tracks.

The Wall Street Journal (subscription required) has two very interesting op-eds today:

Douglas McCollam has an op-ed entitled “Legal Ease” which discusses how lawyers have “sailed through the current economic chop with little more than a touch of sea sickness,” largely due to Sarbanes-Oxley. The article states:

Perhaps no single act has done more for the bottom line of the legal profession than last year’s passage of the Sarbanes-Oxley corporate reform act. In the year since the law took effect, every firm with a coffee maker and a receptionist in the lobby has created a Sarbanes practice group dedicated to scaring the bejeezus out of corporate clients about the dangers of noncompliance. A study conducted by the law firm of Foley & Lardner showed legal fees at public companies shot up 91% last year as executives coped with night sweats created by the new law.

The Journal also has this humorous op-ed entitled “Where’s Moses?” about the ACLU’s push to locate a missing Ten Commandments monument which was discussed in this article for the Salt Lake Tribune–“Utah ACLU Hopes To Find Religion” and also mentioned at How Appealing here last week.

Today’s Federal Register.

You’ve heard of a run on a bank. Ever heard of a run on a pension plan? That is the subject of this article–“A Lump-Sum Threat to Pension Funds“–by Mary Williams Marsh for the New York Times here or via the Tuscaloosa News. The article discusses how those employees nearing retirement who are working for companies with underfunded pension plans are considering early retirement along with lump-sum payouts to avoid the scenarios which occurred with U.S. Airways (discussed in this article–“Broken Promises“–for the Tampa Tribune.) The New York Times article reports:

Officials of the Pension Benefit Guaranty Corporation, the government agency that insures the plans, say they are monitoring the pension funds of two companies where worried employees are withdrawing their benefits, further eroding weakened plans. A spokesman for the insurance agency declined to identify the companies, citing concerns about the possible effect on their stock prices.

As the article states so aptly, it is very hard for employees to get the real picture about the health of the pension funds they are apart of, making a decision such as when to retire even more difficult.

But determining the condition of an underfunded plan can even be problematic for the directors of a company to determine, as discussed in this article by Randy Myers for Corporate Board Member: “How to Tell if Your Company’s Pension Plan Is Sinking.” The article urges board members “to find out just how healthy their company’s pension plan really is” and explains the challenges directors face in getting to the bottom of it:

The scary news for anyone monitoring these figures—and board members should be—is that bad as they are, they don’t reflect the whole problem. U.S. pension accounting is a notoriously perverse art that at times allows a company to book pension income when the fund is actually experiencing losses, to show pension-related assets on the balance sheet without recording underfunded plans as a liability, and to base the whole ball of wax on a series of forecasts about future plan performance that may be wildly out of step with reality.

And while we are on the subject of pension funding, the American Benefits Council has some great materials posted on their website “in preparation for continuing debate on pension interest rate replacement by Congress and the Bush Administration.” The materials include a comprehensive chart comparing the various legislative proposals to current law, prepared by the Benefits Group of Davis and Harman, and talking points on interest rate replacement, lump sums and the yield curve approach. You can also access all of the proposed legislation at their website as well.

Thanks to the 401khelpcenter.com for this link on their site. In case you do not know, the 401khelpcenter.com is a great place to find a wealth of information on 401(k) plans. What is nice is that the site is organized into three categories–Plan Sponsor Channel, Small Business Channel, and Plan Participant Channel–so that you can obtain information from each of these perspectives. Rick Meigs is the creator and founder of the site and is now the President of 401khelpcenter.com, LLC a three-year-old Internet Company based in Portland, Oregon.

I have always thought this might be a good place for law firms and ERISA and benefits attorneys to connect regarding employment opportunities. In that regard, a Philadelphia attorney has written me and given me permission to mention his request here:

I am a 1999 graduate of a top 10 law school. My legal employment since graduation consists of one year as a clerk to a judge in a Pennsylvania appeals court, and three years as an associate in an AmLaw 100 law firm in its Employee Benefits department. My experience has involved advising clients in all aspects of ERISA and the tax code, and drafting documentation for all types of health and pension plans. Specifically, I have been involved in guiding clients through the maze of administrative remedies such as the Internal Revenue Service’s Employee Plans Compliance Resolution System (“EPCRS”) and the Department of Labor’s Prohibited Transaction Exemption program and Delinquent Filer Voluntary Compliance Program. Recently, I have also provided substantial advice on HIPAA compliance. I am currently looking for a position either in an Employee Benefits group, or in a broader practice area in which my benefits skills can be utilized, such as a Labor or Health Care practice.

Please take particular note of the HIPAA experience. That is hard to come by. You can email this attorney by clicking here.

The Wall Street Journal today has a great article by John Hechinger on the new products available for retirees with large 401(k) balances: “Wall Street’s Plan For Your Nest Egg: In a Shift, Brokers Target People Tapping Into Retirement Savings.” The article discusses how in 7 years, the first wave of baby boomers will begin retiring and companies are inventing new products that will seek to tap into this retirement market. One such product is a “GRIN” or a “Guaranteed retirement Income Security” which Prudential Financial Inc. is offering.

Today’s Federal Register.

Kathy M. Kristoff has a good article via SunSpot.net on the IBM cash balance plan case which originally appeared in the LA Times: “Ruling casts doubt on pension change.” The article reports that “dozens of corporate lobbyists have descended on Capitol Hill to urge lawmakers to act on cash-balance legislation, potentially turning the tide for legislation.” You can access previous posts on the IBM case here.

“Be Careful What You Wish For“: Seymour Burchman, Blair Jones and David Leach write an op-ed for Forbes.com which seeks to answer this question regarding reforms brought about SOX, the NYSE, and Nasdaq: “Will compensation committees be able to comply with the original objectives of the reforms, i.e., to strengthen the linkage to shareholder interests and to allow more shareholder influence over executive pay decisions?”

“Kidney stones and the $78K loophole“: the Houston Chronicle provides this very interesting article about a HIPAA “loophole.”

Thanks to Benefitslink.com for this article by Linda Shashinka, Esq., for Near North on debit/credit cards for section 125 plans (the subject of previous posts here).

You can access some great adoption assistance forms at Thompson Publishing that were drafted by McDermott, Will & Emery.

In a previous post–ERISA: Trap or Oasis–I mentioned two articles which had discussed some of the roadblocks to a plaintiff’s recovery under ERISA. Brian Scheiderer in his blawg, LiveFree, at this post and this post discusses the subject as well. Brian aptly points out that the main obstacle to recovery under ERISA is the arbitrary and capricious standard or abuse of discretion standard which is applied when a claim for wrongful denial of benefits is brought under ERISA. In other words, when an ERISA plan fiduciary decides that a participant is not entitled to certain benefits under a plan, if the participant sues, the plan fiduciary’s decision will only be overturned if it was arbitrary and capricious. (This can be good for plans and ERISA plan fiduciaries, but bad for plaintiffs.)

I guess this discussion would be lacking if I did not mention that in order for a plan to obtain this standard of review, the plan must, under the U.S. Supreme Court landmark case of Firestone Tire and Rubber Co. v. Bruch, contain language providing the plan fiduciary with discretionary authority to determine eligibility for benefits or to construe the terms of the plan documents. If the plan document does not contain such language, then the case will proceed under a de novo standard, which means that plaintiff will have a greater chance of recovery.

Please note that, in cases of a strong conflict of interest, such as under the case of Lang v. Long-Term Disability Plan of Sponsor Applied Remote Technology, Inc. courts have sometimes applied the de novo standard even where the plan contains the necessary language. Also, as to a plan administrator’s factual determinations, BNA reports that there is a wide split in the federal circuits over whether Firestone requires a de novo or an abuse-of-discretion standard of review.

Note to ERISA Plan fiduciaries: Most plans now include this “Firestone” language giving discretionary authority to determine eligibility for benefits or to construe the terms of the plan documents. However, all plans subject to ERISA should be reviewed to make sure that they include this language and the language should also be included in the summary plan description as well.

(By the way, Brian had one of the greatest posts ever here. (IMHO) Yes, I definitely think that lawyers can be ministers.)